BEIJING: China Mobile is suffering the effects of the Chinese government's decision to award third-generation telecoms licences to smaller competitors China Unicom and China Telecom in January.

China Mobile's current earnings are flat and it now accounts for 60% of new subscribers in China, down from 90% last year.

"Macroeconomic slowdown, a rising mobile communications penetration rate and changes in the competitive environment of the telecoms industry in China have posed challenges to the development of our business in the first half of 2009," says chairman Wang Jianzhou.

"The company will actively search for quality overseas telecoms assets as investment opportunities and as a way to explore international development."

China Mobile has agreed to buy 12% of Taiwan's FarEasTone Telecommunications but is still waiting for regulatory approval.

The big issue facing the company in China is 3G. China Unicom and China Telecom have been awarded licences based on proven international standards W-CDMA and CDMA 2000 respectively, whereas China Mobile has been tasked with developing homegrown Chinese technology TD-SCDMA.

China Unicom is also expected to win the distribution rights for the all-conquering Apple iPhone. China Mobile is launching its own smartphone, the 3G OPhone based on Google's Android system with hardware from Dell Computer.

Data sourced from Financial Times; additional content by WARC staff